01/13/2020 | Press release | Distributed by Public on 01/13/2020 14:10
BOSTON - The founder and operator of a Swiss asset management firm pleaded guilty today in federal court in Boston to charges that he engaged with others in a massive global securities fraud scheme that netted proceeds of approximately $164 million.
Roger Knox, 49, pleaded guilty to securities fraud and conspiracy to commit securities fraud before U.S. District Court Judge Nathaniel M. Gorton, who scheduled sentencing for April 23, 2020.
Knox, with others, operated a purported asset management firm based in Switzerland called Silverton, and later renamed Wintercap. Through this business, Knox helped facilitate pump-and-dump, and other market manipulation schemes, by selling massive quantities of microcap securities on behalf of 'control groups' who secretly owned the stock through nominee shareholders, and who simultaneously orchestrated promotional campaigns and other efforts to artificially inflate the price and trading volume of those shares. Knox then funneled the proceeds of the securities fraud-totaling an estimated $164 million over the last three years-to co-conspirators in the United States, and elsewhere, through a complex money transfer system that disguised the source and nature of the funds.
One security that was traded through Knox's Silverton firm was a stock called Environmental Packaging Technologies, Inc. ('EPTI'). In June 2017, EPTI was subject to a pump-and-dump scheme using Knox's Silverton platform. Co-defendants Matthew Ledvina and Milan Patel, knowing that EPTI stock was controlled by another co-defendant, Morrie Tobin, helped create nominee entities to hold Tobin's stock so that it could be sold in a pump-and-dump in violation of United States securities laws. During the pump-and-dump, Knox's Silverton platform managed to sell approximately $1.5 million worth of EPTI stock before trading was halted by the Securities and Exchange Commission (SEC).
Ledvina, Patel and Tobin have all pleaded guilty and await sentencing.
The charge of securities fraud provides for a sentence of up to 20 years in prison, three years of supervised release and a fine of $5 million. The charge of conspiracy to commit securities fraud provides for a sentence of up to five years in prison, three years of supervised release and a fine of $250,000, or twice the gross gain or gross loss. Sentences are imposed by a federal district court judge based on the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Andrew E. Lelling and Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division made the announcement today. The Boston regional office of the SEC provided assistance with the investigation. Assistant U.S. Attorneys Eric S. Rosen and James Drabick of Lelling's Securities and Financial Fraud Unit are prosecuting the case.